Finnish Financial Supervisory Authority FIVA has given Tapiola Bank Ltd a public warning for omissions in internal control and risk management arrangement for securities brokering. According to the supervision authority, Tapiola has entered client’s book-entry securities in its own book-entry accounts. This means that the transactions were legally bank’s own and maintained under the bank's name in the central securities depository instead of shown as belonging to the investor making the transaction.
This severe breach of separation of client funds might have led to a delay or worse pertaining to the return of ownership of the financial instruments in the event of bank insolvency. The financial institutions need to handle these manners in such a way, that there is no danger of mixing up client and investment service provider’s funds. FIVA says that the administrative sanctions available to it in such a case are public reprimand and public warning. The warning does not have legal force, for Tapiola may appeal the decision to the Helsinki Administrative Court within a 30 day window.
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